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Oil Giants Start Losing Safety Net as Refining Margins Squeezed

By on 19 Jan 2016 in news, notable posts
Oil Giants Start Losing Safety Net as Refining Margins Squeezed

(Bloomberg) Refining profits that buttressed earnings for Exxon Mobil Corp. and Royal Dutch Shell Plc as crude prices plunged are now slumping, further pressuring all of the world’s biggest oil companies as they move into 2016.

Global refining margins, the estimated profit from turning oil into gasoline and diesel, fell 34 percent in the fourth quarter, the steepest decline in eight years, to $13.20 a barrel, data on BP Plc’s website show. Every $1 drop cuts BP’s pretax adjusted earnings by $500 million a year, according to its website.

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IEA says world ‘drowning’ in oil, prices could go lower

By on 19 Jan 2016 in news, notable posts
IEA says world ‘drowning’ in oil, prices could go lower

(CNN) World is ‘drowning’ in oil, says IEA Can oil really go lower? The answer from the International Energy Agency is an “emphatic yes.” The world is “drowning” in oil, and weak demand has failed to match relentless pumping by the world’s biggest oil producers, the group said. With Iran planning to boost its production by as much as 1.5 million barrels a day by the end of 2016, the global oil glut will get even worse.

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$20 Oil No Longer Seen As Good For The Economy

By on 18 Jan 2016 in news, notable posts
$20 Oil No Longer Seen As Good For The Economy

(OilPrice.com) After flirting with breaking below $30 per barrel, oil decidedly broke that threshold at the end of last week, deepening the unrelenting losses the market shave witnessed so far in 2016.

The reasons for the 20 percent decline in oil prices since the start of the year range from rapidly growing concerns over the Chinese economy , fears of a persistent glut in oil supplies, and most recently the removal of sanctions on Iran .

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Analysis

Is Non-OPEC Beginning to Decline?

By on 27 Jan 2016 in analysis, notable posts
Is Non-OPEC Beginning to Decline?

(Peak Oil Barrel) The EIA’s Monthly Energy Review just came out. They have the U.S. production numbers through December along with World, OPEC C+C, Non-OPEC and selected Non-OPEC nations through October. All EIA data is in thousand barrels per day.

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The Hidden Consequences of the Oil Crash

By on 26 Jan 2016 in analysis, notable posts
The Hidden Consequences of the Oil Crash

(Politico) For months, American drivers have been greeted at gas stations with a pleasant surprise: Gas prices have fallen by half, dropping an average of more than $2 a gallon since their most recent peak in 2011. President Barack Obama took a moment to bask in the credit last week in his State of the Union speech: “Gas under two bucks a gallon ain’t bad,” he said.(Politico) For months, American drivers have been greeted at gas stations with a pleasant surprise: Gas prices have fallen by half, dropping an average of more than $2 a gallon since their most recent peak in 2011. President Barack Obama took a moment to bask in the credit last week in his State of the Union speech: “Gas under two bucks a gallon ain’t bad,” he said.

Or maybe it is.

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The oil conundrum

By on 25 Jan 2016 in analysis, notable posts
The oil conundrum

(The Economist) Oil traders are paying unusual attention to Kharg, a small island 25km (16 miles) off the coast of Iran. On its lee side, identifiable to orbiting satellites by the transponders on their decks, are half a dozen or so huge oil tankers that have been anchored there for months.

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Viewpoints

Why Goldman Sachs Says $30 Oil Isn’t Proof of Weak Demand

By on 28 Jan 2016 in notable posts, viewpoints
Why Goldman Sachs Says $30 Oil Isn’t Proof of Weak Demand

(Bloomberg) Oil’s collapse to $27 a barrel last week spurred concern that, on top of the existing oversupply, the market is facing a demand crisis. Goldman Sachs Group Inc. thinks that’s wrong.

Over the past six weeks, long-term oil futures — for deliveries in five years’ time — have fallen even harder than prices for immediate supplies.

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The Myth of US Self-Sufficiency in Crude Oil

By on 21 Jan 2016 in notable posts, viewpoints
The Myth of US Self-Sufficiency in Crude Oil

(Energy Matters) Guest post by Matt Mushalik who runs the Australian Crude Oil Peak web site where this article was first published. There is a wealth of information and brilliant charts below the fold.

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The great condensate con: Is the oil glut just about oil?

By on 17 Jan 2016 in notable posts, viewpoints
The great condensate con: Is the oil glut just about oil?

(Resilience.org) My favorite Texas oilman Jeffrey Brown is at it again. In a recent email he’s pointing out to everyone who will listen that the supposed oversupply of crude oil isn’t quite what it seems.

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Other Recent Posts

Quote of the week: Han de Jong, chief economist at ABN Amro Bank NV

By on 8 Feb 2016 in quotes with 0 Comments

“I never thought I would wish, let alone pray, for higher oil prices, but I am. The world badly needs higher oil prices.”

Han de Jong, chief economist at ABN Amro Bank NV in Amsterdam

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Peak Oil Review – 8 Feb 2016

By on 8 Feb 2016 in Peak Oil Review with 0 Comments

It was a volatile week, with prices falling on Monday and Tuesday due to the oversupply situation and traders deciding that a grand agreement between Russia and OPEC to cut oil production was unlikely. However, prices climbed on Wednesday as talk of the Russia/OPEC deal revived, the US dollar underwent a sudden price drop, and a hedge fund that that held $600 million in short oil futures positions was liquidated. On Thursday and Friday, the markets were back to believing that the Saudis were not going to cut production as Riyadh lowered their prices for oil being sold to Europe and Asia as part of the new competition with Iran. A big jump in US crude and gasoline inventories announced on Wednesday helped with the downward pressure. At week’s end, New York futures closed at $30.89, down 8.1 percent for the week and London closed at $34.06, down 5.4 percent for the week.

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Quote of the week: Marco Dunand founder and CEO of trading house Mercuria

By on 1 Feb 2016 in quotes with 0 Comments

“The fact that some oil is being sold at $10 per barrel – like some Canadian and Venezuelan crude grades – shows that the strain on producers has rarely been so big. At this level, some producers are not covering capital and operating expenses. And costs are even higher to shut down production. These prices will serve as destabilizing factors in many producing countries and on many bank loans.”

Marco Dunand founder and CEO of trading house Mercuria

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Peak Oil Review – 1 Feb 2016

By on 1 Feb 2016 in Peak Oil Review with 0 Comments

Last week there was a surge in oil prices based on rumors and statements from Iraq’s oil minister and a Russian pipeline official that Russia and the Saudis might be considering a meeting to discuss “coordination” of their oil production. The merest hint of a supply cut was enough to send traders into a frenzy. Short positions were covered and prices rose from below $30 a barrel to nearly $36 in London. The story was quickly denied by numerous OPEC officials and even by Russia’s deputy prime minister, but oil prices stayed firm closing at $33.62 in New York and $34.74 in London.

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OECD review committee chairman’s perspective on the global economy

By on 25 Jan 2016 in quotes with 0 Comments

“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up. Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief. It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something. The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.”

William White, chairman, OECD’s review committee; former chief economist, Bank for International Settlements

“So much of the frenzy in shale in the past few years was a result of the money pouring out of Wall Street. It was as much a Wall Street play as it was an oil-and-gas play. It was putting money to work. Companies took on all that risk and now we see the result [–bankruptcies].”

Terry Clark, White Marlin Oil & Gas Co.

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Peak Oil Review – 25 Jan 2016

By on 25 Jan 2016 in Peak Oil Review with 0 Comments

Oil prices touched 12 year lows of just above $27 a barrel on Wednesday and then rebounded sharply to close above $32 on Friday. Other than the major east coast snowstorm in the US and the expectation there would be more demand for heating oil, there was no significant news to touch off the rebound other than traders feeling there was not much downside for oil prices left and that it was time to take profits. The rapid rebound was helped by the record size of the short positions held by hedge funds. As these were liquidated, the rebound accelerated to gain some 21 percent from the Wednesday lows. Hints by the European Central Bank last week that there could be a further stimulus coming also supported the move.

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Why Iran is a problem for the oil market

By on 25 Jan 2016 in analysis, notable posts
Why Iran is a problem for the oil market

(CNBC) An Iranian oil tanker, moored at the port of Assaluyeh for more than a year, set sail for South Korea last week, heralding a new period of uncertainty for world crude prices.

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Saudi Arabia Will Be the Big Loser from the Plunge In Oil Prices

By on 21 Jan 2016 in analysis, notable posts
Saudi Arabia Will Be the Big Loser from the Plunge In Oil Prices

(Time) Ali Bin Ibrahim al-Naimi, Saudi Arabia’s petroleum and mineral resources minister, at the 168th Organization of Petroleum Exporting Countries (OPEC) meeting in Vienna on Dec. 4, 2015. The country relies on oil for about 80% of budget revenue.

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Why Oil Prices Could Remain Low

By on 19 Jan 2016 in analysis, notable posts

(Seeking Alpha) There is much hope in the financial markets, with individual investors and oil company employees that oil prices will rise in the months ahead. Many point to the 2008 commodity crash as THE example as to why the oil price decline is likely temporary. However, if we look back further in history we see another situation where the crash in commodity prices marked an extremely long period of oil price suppression.

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Goldman Sachs, in a note to oil industry investors

By on 18 Jan 2016 in quotes with 0 Comments

“At our conference, producers largely did not provide specifics on what capex/ production would look like at $35/bbl of oil. Instead, producers spoke largely of their agility to spend within cash flow and … ramp up when needed. Commentary suggested $50 per barrel WTI is now where producers would raise activity.”

Goldman Sachs, in a note to investors

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